It has been about a month since the last earnings report for Superior Industries International, Inc. (SUP - Free Report) . Shares have lost about 17.9% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Superior Industries Q2 Earnings Miss, Revenues Beat
Superior Industries’ adjusted earnings were $0.37 per share in second-quarter 2017, missing the Zacks Consensus Estimate of $0.48. The reported quarter’s figure also plunged 28.9% from the year-ago tally of $0.52. Including acquisition-related costs, earnings came in at $0.78 per share.
Revenues were $240.6 million in the reported quarter, higher than $182.7 million in the year-ago quarter. Revenues also comfortably surpassed the Zacks Consensus Estimate of $189.4 million.
Wheel unit shipments were 3.8 million compared with the prior-year quarter of 3.1 million units. Value-added sales, i.e., net sales minus pass-through charges for aluminum increased to $130.4 million in comparison to $101.2 million in the second quarter of 2016.
Gross profit fell to $20.1 million (8.4% of net sales) from $29.5 million (16.2%) in the year-ago quarter. This decrease was due to lower unit shipments and manufacturing inefficiencies in North America, partly offset by a favorable foreign exchange. Accounting and amortization of intangibles by $8.3 million, related to the acquisition of UNIWHEELS, has also in turn led to the decline in gross profit.
Selling, general and administrative expenses jumped to $22.1 million (9.2% of net sales) in second-quarter 2017 from $10 million (5.5% of net sales) in the prior-year quarter.
On May 30, 2017, the company completed the acquisition of approximately 92.3% of UNIWHEELS’ outstanding common stocks. The acquisition will help Superior Industries to expand its global reach, diversify customer base and expand their technological capabilities.
In second-quarter 2017, Superior Industries’ net cash used by operating activities was $8.5 million as against the cash generated from operating activities of $8.5 million in the year-ago period. The decrease was primarily due to costs related to the acquisition of UNIWHEELS and an increase in working capital.
Superior Industries expects net sales for 2017 in the range of $1.1-$1.11 billion compared with the previous projection of $730–$750 million.
Unit shipments in 2017 are expected in the range of 16.9–17.2 million compared with the past estimate of 12−12.25 million.
Superior Industries expects value-added sales in the band of $595-$615 million, much above the previous guidance of $400–$410 million. Adjusted EBITDA is expected in the range of $135-$145 million compared with the prior outlook of $97−$105 million.
The company projected capital expenditure to be approximately $85 million, higher than the previous expectation of around $50 million for 2017. The effective tax rate is estimated at a 10-13% range, lower than the previous outlook of 25−28%.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been three revisions lower for the current quarter. In the past month, the consensus estimate has shifted down by 7.4% due to these changes.
At this time, the stock has a poor Growth Score of F, however its Momentum is doing a lot better with an A. Following the exact same course, the stock was allocated also a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and momentum investors.
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #4 (Sell). We are expecting a below average return from the stock in the next few months.